Department stores face gloomy outlook

By Park Jae-hyuk

Korea’s major department stores seem to face tough days again this year, in the wake of weakening consumer confidence amid a long-term slump and an ongoing political crisis, data showed Monday.

Lotte Department Store’s November sales dropped 0.5 percent year-on-year, while its December sales also declined by the same rate year-on-year. Shinsegae Department Store showed 4.1 percent and 1.7 percent drops in sales in November and December, respectively.

Observers suggested the two largest retailers are facing slow sales because both were significantly affected by the massive candlelit rallies held every weekend near their main branches in downtown Seoul.

However, Hyundai Department Store, another large retailer, also suffered sales drops of 1.5 percent and 0.8 percent in November and December, respectively, even though its main branch is located in Gangnam, southeastern Seoul, far from the protests.

“Social issues, including candlelit rallies, bird flu and the anti-graft law, seem to have negatively affected department stores,” KTB Investment & Securities analyst Lee Nam-joon said. “Discount events were not that effective for department store sales either.”

The analyst added that Hyundai Department Store will suffer extra losses due to the initial cost of opening its first duty free store. Lotte and Shinsegae also won new duty free licenses in December, though they have already operated stores in other areas.